If your aggregate turnover in the previous financial year was up to ₹5 crore, you must print at least a 4-digit HSN code on tax invoices issued to registered buyers (B2B). If it was above ₹5 crore, you must print a 6-digit HSN code on all tax invoices. Taxpayers with turnover up to ₹5 crore may leave out the HSN code on invoices to unregistered customers (B2C). These rules have applied since 1 April 2021.
What an HSN code is
HSN stands for Harmonised System of Nomenclature. It is a numbering system that classifies goods. The first two digits are the chapter, the next two the heading, and further digits narrow it down to the exact product. Services use a similar set of codes called service accounting codes (SAC).
The HSN code decides the GST rate of a product, so the right code matters for charging the right tax.
How many digits to print
The requirement comes from a notification under Rule 46 that took effect on 1 April 2021 (Notification No. 78/2020 - Central Tax).
| Aggregate turnover in the previous financial year | HSN digits on a tax invoice |
|---|---|
| Up to ₹5 crore | 4 digits on B2B invoices. Optional on B2C invoices |
| Above ₹5 crore | 6 digits on all invoices, B2B and B2C |
Aggregate turnover is counted for all GSTINs under the same PAN, across India, and it is the turnover of the previous financial year that decides the digits for the current year.
The B2C relaxation for small taxpayers
A registered person with aggregate turnover up to ₹5 crore in the previous financial year may leave out the HSN code on a tax invoice issued to an unregistered person. So a kirana or garment shop below ₹5 crore that sells to walk-in customers is not required to print HSN on those bills.
The same shop must still print at least 4 digits when it sells to another registered business, for example a hotel or an office buying on its GSTIN.
Exports and special cases
Exporters generally use the 8-digit code, because the shipping bill and customs documents need it. A separate notification also asks for 8 digits for certain specified chemicals. If either applies to you, confirm the current list with your CA.
HSN in GSTR-1
GSTR-1 has an HSN-wise summary of outward supplies. The digits reported there follow the same turnover rule as invoices. Keeping the right HSN on each item in your item list makes this summary easy to prepare at the end of the month or quarter.
How to find the right HSN code
- Look at the purchase invoice from your supplier. A registered supplier prints the HSN code against each item.
- Use the HSN search on the GST portal (gst.gov.in) to look up a product by name or code.
- Check the GST rate notification for the chapter if a product could fall under two headings, or ask your CA.
- Save the code against the item once, so every bill and report picks it up.
If the HSN code is wrong or missing
A missing or wrong HSN code where it is compulsory is a breach of the invoicing rules and can attract a penalty under the CGST Act. A wrong code can also mean the wrong GST rate was charged, which is the bigger risk: short-paid tax is recovered with interest. Fix the code in your item list as soon as you notice it.
Where FundRaksha Book fits
FundRaksha Book is GST billing software for shops and wholesalers: you enter a supplier bill once and items, stock and selling prices are set up in one go, then you bill by scanning. Your first 300 invoices are free, then it is ₹999 a year. Start free, or read about the mandatory fields on a GST invoice.
Frequently asked questions
Is HSN code mandatory for turnover below ₹5 crore?
Yes, on B2B tax invoices: at least 4 digits. On invoices to unregistered customers (B2C) it is optional for taxpayers with turnover up to ₹5 crore.
How many HSN digits are needed above ₹5 crore turnover?
Six digits, on all tax invoices, whether the buyer is registered or not.
Which year's turnover decides the number of digits?
The aggregate turnover of the previous financial year, counted for all registrations under the same PAN.
Can I print more digits than required?
Yes. The rule sets a minimum. You can print 6 or 8 digits even if only 4 are required.
Do services need an HSN code?
Services use service accounting codes (SAC), which belong to the same classification system. The same digit rule by turnover applies.
This guide is general information for Indian businesses, not tax advice for your specific case. GST rules, limits and dates change; confirm the current position with your CA or on the GST portal (gst.gov.in) before acting.
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